Top 25 Historical High P/S Ratio Companies

Top 25 Historical High P/S Ratio Companies. These companies have predictable business, but traded at historical high P/S ratios. The purpose of
this portfolio is to show that over-valued stocks appreciate less than the undervalued ones. For details, see New Model Portfolios: Overvalued Stocks

Questions about how the Model Portfolios were constructed, please the articles listed at the left side menu..

User Comments

In response to your topic about the less-than-stellar performance of the buffet-munger screener in the last two years.....

I think it is logical that no rational strategy will work in an irrational market or as I sometimes put it:

In a room full of idiots, you will have problems regardless of the level of your own rationality.

Now the question is, are we in a rational environment today? It is a question I'm still trying to figure out but I can tell you that the market today is far less rational than it was in 2008/2009. Back then only value investors would dare to invest and as market participants go, they are a fairly predictable bunch.

Now you have all sorts of investors piling in and as a group the behaviour of the market participants is becoming increasingly unpredictable.

In short,
To me the question is not whether a different strategy would work better under current conditions but whether it likely that any rational strategy would work. If the answer to that question is yes, then it would make sense to put in an effort to figure out which strategy that would be. If not, not.

Of course there are also irrational strategies. I have a friend who has been highly successful with what I would consider irrational market behaviour. I.e, buying stocks that he knows to be terribly expensive and which he believes will become even more expensive. He is very good at that and he has had some very impressive returns in recent years.

I would rather not do that. My sanity is worth more to me than my portfolio.

Hi GF and GF community, a topic i wanted to raise to get some feedback and spur some general discussion about this topic. I have noticed that the Y-Y return since Jan 1, 2014 is very marginal and is trailing the S&P. This could reflect that perhaps the buffett-munger screener approach with a 1 year refresh does not work very well in a growth environment (like what we have now in the US markets) as opposed to investing at times when we had more deeper value opportunities (like in 2009, 2010).

Gurufocus,
As Yoramhtm inquired, the Historically Low P/S portfolio has not been rebalanced (shows last rebalance 2014-01-01).

Also, the Hist Low P/S portfolio, the Hist Low P/B portfolio, and the Undervalued Predictable portfolio include several OTC foreign stocks and ADRs that were excluded from prior year portfolios. Is this an error or a change in portfolio criteria?

Gurufocus -
can you please answer to my question below whether the price data of the strategies above are downloadable in Excel format to conduct some further analysis. This would be highly appreciated. Many Thanks!

"Is this EBITDA per share annualized compound growth rate of last 6 years having the same calculation (except for the number of years) as the EBITDA growth rate of the last 5 and 10 years that are published on this web site?"

Is this EBITDA per share annualized compound growth rate of last 6 years having the same calculation (except for the number of years) as the EBITDA growth rate of the last 5 and 10 years that are published on this web site?

1. Since we started Buffett-Munger model portfolios 5 years ago, we never changed rules.

2. Since in predictability rank, we separate the last 11 years of business into first half and second half, the EBITDA growth rate we use is actually the EBITDA per share annualized compound growth rate of last 6 years. This number is not published anywhere on the website.

Maybe I have not yet seen it, but the performance stats of a strategy vs an index should always include at least some basic rsik measures, i.e. at least standad deviation, beta and correlation to get some insight on risk-adjusted performance.

It is essential to understand whether the superior performance is a result of true excess returns or just because of a beta which higher than 1. In the latter case the performance of the strategy could easily replicated with an index ETF which is slightly levered. But is would not be a superior strategy.

The presentation of results without these risk measures is just not fair (especially for unexperienced users) as it might be misleading and suggest a superior strategy which might not be superior at all.

Is it at least possible to download the chart data to calculate some own stats? Thanks

I have the same question as Thomas with respect to the Undervalued Predictable Model Portfolio. I took a snapshot at 3 January 2014 of the Undervalued Predictable Screening: WTW was number 10 (currently number 11), CA number 16 (currencly number 18), MDT number 18 (currently number 20), RL number 19, TJX number 20, etc. They are all not part of the current (at 7 January 2014) model portfolio.

Gurufocus, your reputation is on the line with your paid subscribers - please clarify Thomas's question below as it is extremely important for subscribers like us who follow this portfolio's rebalancing every year. I need to also know what criteria you have used as i agree with Thomas, it is different from the top 25 PEG undervalued stocks from the BM screener

Thomas's question needs to be answered, besides continuing to hold last years stocks that are in the year end screener what criteria is used to pick the replacement stocks for the Buffett-Munger rebalance since most of the top ranked stocks did not end up in the portfolio. The only explanation to why these highly ranked stocks did not show up in the portfolio is that some other criteria is more important than the rank. Please explain.

Yes. Back of the envelope calculation shows S&P 500 up 13.25% from Jan 2 to Jul 3. This portfolio was up only 7.28%! And this is before the accounting issues were revealed at WRLD, which really took a beating on 7/5. Yes. Annual and YTD calculations would be useful.

It would be helpful if you broke down performance by year. You have tinkered with this tool over time, most recently to include more international stocks. An annual breakdown would help us evaluate whether the changes have affected this tool. It looks to me like the 1/1/13 portfolio has actually lagged badly behind the S&P 500 for the first six months of the year.

The model portfolio simply reflects the result of the screener on January 1 of each year. At yearend, the portfolio is liquidated and the money is invested in the a new set of stocks.

BUT

A stock that was in the portfolio before and shows up in the screener on January 1, is left untouched. It is left to compound. One example is World Acceptance Corporation (WRLD). This stock was bought in 2009 and has been in the model portfolio ever since. The reason for this is that the screener has consistently "recommended" WRLD on January 1 of each year since 2009.

The newsletter does not generate ideas for the model portfolio. It's the reverse. Any stock in the model portfolio has been consistently profitable over many years. The newsletter is low-level analysis of the drivers of past profitability. This should help to understand the sustainability of profitability going forward.

Hope this helps.

Feel free to drop me a message if you have further questions about the newsletter, the portfolio or the screener. You can find my e-mail adress in the newsletter or on my profile on this site.

Hi,
I am trying to understand how the annual rebalance on the gurufocus model portfolios works. Can you please explain how GuruFocus rebalances at the beginning of the year. For e.g. lets assume we start with 100K and there are 24 stock picks by year end in the Buffett-Munger newletter recommended for 2012, How does Gurufocus determine which stocks to sell from its existing portfolio and which ones to add in Jan?
Thanks for the assistance
Aninda (a premium member)

When I look at the cost basis of assets in the portfolio, the total adds up to 143783.43 vs. 100,000 reported on the portfolio. Can you help me understand why there is a difference in cost basis on these assets. Given the information provided above there is a 23.31% increase in the value of the portfolio.

just looked at the model portfolios again...I see. Similar to Max 7777's question...for those who wish to know...the portfolio selects the number of shares so that all constituents roughly have the same weightings at the start of each year... rgds

Gurufocus - Why can't I see the holdings in the model portfolios anymore? I used to be able to see the holdings, but now there is a link telling me to log in. However, I'm already logged in and following the link does nothing but bring me back to the home page.

Can you expend on how this portfolio was made, how you picked the number of shares and also what is the difference between broadest portfolio and consensus portfolio. (In my mind, the most broadly held 25 stocks should also be the ones with biggest consensus, but I must be wrong)

Since this portfolio did the best, is there any prior data to see how it performed in other years and how it did in up markets vs down markets.

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